Banks lend more to small business in H1

Chinese financial institutions increased credit support to the country's small business to shore up their growth, despite maintaining an overall lending curb, a central bank official said on Thursday.

Against the backdrop of a prudent monetary policy, loans to small businesses accounted for a higher percentage of total lending in the first half of this year, said Wu Xianting, deputy director of the financial market department of the People's Bank of China (PBOC), in an online interview with www.gov.cn, the Chinese government's official website.

By the end of June, the total balance of loans to small- and mid-sized companies stood at 20.1 trillion yuan, a rise of 18.2 percent from a year ago, Wu said.

The share of loans to small enterprises in total bank lending was 0.6 percentage points higher than at the end of 2010 and 2.5 percentage points higher than at the end of 2009.

In an effort to curb escalating inflation by soaking up liquidity, the central bank has ordered the nation's banks to set aside a record high of 21.5 percent of their cash in reserves and has also increased benchmark interest rates five times since October.

The central bank also stressed the need to adjust the lending structure by giving more support to small businesses and the rural sector, both of which generally have less access to bank lending compared with large, state-owned firms.

"The current changes fit our expectations," Wu said.

He also encouraged institutions to enhance financial innovation and broaden fund channels for small firms.